When it comes to government debt levels, one nation stands out among the rest

When it comes to government debt levels, one nation stands head and shoulders above the rest: Japan.

This chart from HSBC underlines that point.

HSBC

While Japan’s government debt pile has grown slower than other nations over the past five years as a ratio of GDP, in absolute terms, it’s currently more than double the size of annual economic output – more than 60 percentage points higher than second-most indebted Italy on the chart.

“Government debt has swelled rapidly since the early 1990s, largely attributable to rising social security costs due to the country’s ageing population,” says HSBC.

Although huge both in currency and GDP terms, Japan’s debt pile has, as yet, not translated to a surge in debt repayments for the government, something HSBC says is partially explained by the ongoing monetary policy easing from the Bank of Japan (BoJ), or bond purchases, put simplistically.

“So far, the pressure on government funding has been limited, thanks to the Bank of Japan’s aggressive buying and yield management under its Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control (YCC),” HSBC says.

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